10-K: Balance Labs Reports Increased Net Loss for Fiscal Year 2024 Amid Going Concern Uncertainty

Balance Labs, a consulting firm for startups, reported a net loss of $528,223 for the year ended December 31, 2024, and its independent auditor has raised substantial doubt about its ability to continue as a going concern.

Summary

• Balance Labs, Inc., a consulting firm for startup and development-stage businesses, reported its Form 10-K for the fiscal year ended December 31, 2024.
• The company's independent registered public accounting firm has expressed substantial doubt about its ability to continue as a going concern.
• The company reported a net loss of $528,223 for the year ended December 31, 2024, compared to a net loss of $381,571 for the year ended December 31, 2023.
• The increased loss is primarily attributed to an increase in wages and salaries and legal and professional fees.
• The company had no revenue from related parties for both 2024 and 2023.
• General and administrative expenses decreased by 62% to $13,647 in 2024.
• Professional fees increased by 186% to $71,634 in 2024.
• The company experienced negative cash flows from operating activities for both years, with $157,110 used in 2024.
• As of December 31, 2024, the company had a working capital deficiency of $5,071,106.
• The company is actively pursuing new client relationships and seeking additional capital to fund operations.
• The company's common stock is quoted on the OTC Pink Market under the symbol BLNC.
• As of April 15, 2025, there were 21,674,000 shares of common stock outstanding.
• The company has material weaknesses in its internal control procedures due to limited resources and lack of segregation of duties.

Sentiment

Score: 3

Explanation: The document presents a negative outlook due to the increased net loss, going concern uncertainty, and material weaknesses in internal control. The company's reliance on related party transactions and its need for additional capital further contribute to the negative sentiment.

Positives

• General and administrative expenses decreased by $21,924, or 62%, due to a decrease in printing, rent, and utilities expenses.
• The company is actively pursuing new client relationships and seeking additional capital to fund operations.

Negatives

• The company's independent auditor has expressed substantial doubt about its ability to continue as a going concern.
• The company reported a net loss of $528,223 for the year ended December 31, 2024.
• The company had a working capital deficiency of $5,071,106 as of December 31, 2024.
• The company has material weaknesses in its internal control procedures due to limited resources and lack of segregation of duties.
• The company has significant related party transactions, including loans and convertible notes that are in default.

Risks

• The company's ability to continue as a going concern is uncertain due to limited cash resources, insufficient revenue, net losses, and accumulated deficit.
• The company may not be able to obtain additional financing on acceptable terms, which could force it to discontinue operations.
• The company's internal control weaknesses could lead to material misstatements in its financial statements.
• The company operates in a highly competitive market and may struggle to differentiate itself.
• The company is dependent on key personnel, and the loss of any of them could have a material adverse effect.
• The company relies heavily on information technology, and any interruption or cybersecurity incidents could harm its ability to operate effectively.

Future Outlook

The company plans to add and service a minimum of two to three new clients between now and the end of 2025 and is seeking additional capital to fund operations.

Management Comments

• Management plans to seek to raise additional capital within the next twelve months that is expected to sustain its operations for the next year.
• Management believes that the material weaknesses set forth above were the result of the scale of our operations and are intrinsic to our small size.
• Management believes these weaknesses did not have a material effect on our financial results and intends to take remedial actions upon receiving funding for the Company's business operations.

Industry Context

The company operates in a competitive market with numerous established consulting firms and faces competition from companies that handle these tasks in-house.

Comparison to Industry Standards

• It is difficult to compare Balance Labs to industry standards due to its unique business model and small size.
• Larger consulting firms like McKinsey, Bain, and BCG have significantly more resources and a broader range of services.
• Smaller, specialized consulting firms may be more comparable, but their financial data is often not publicly available.
• The company's reliance on related party transactions and its going concern status are significant deviations from industry norms.

Related Party Transactions

• The company's CEO earns $10,000 per month under a consulting agreement.
• The company has significant related party transactions, including loans and convertible notes with the CEO and companies controlled by the CEO.
• The company has a convertible note payable to the Sammy Farkas Foundation Inc., a related party.
• The company owns shares in NextNRG Inc. (Formally known as EZFill Holdings, Inc.), a related party, and recorded an unrealized loss on these securities.

Stakeholder Impact

• Shareholders face the risk of dilution if the company raises additional capital through equity offerings.
• Shareholders may lose their investment if the company is unable to continue as a going concern.
• Employees may be affected if the company is forced to reduce costs or discontinue operations.
• Creditors face the risk of non-payment if the company is unable to meet its obligations.

Next Steps

• The company plans to add and service a minimum of two to three new clients between now and the end of 2025.
• The company intends to formalize its relationships with subcontractors to offer turn-key business development products and services.
• The company plans to market its services through personal contact and online channels.
• The company intends to take remedial actions upon receiving funding for the Company's business operations to address material weaknesses in internal control.

Key Dates

Keywords

Balance Labs, consulting, startup, going concern, net loss, financial statements, internal control, related party transactions, working capital, Form 10-K